Research has shown that 60% of restaurants will fail in their first year of business.  More than 80% will close in five years. It can be tough running a restaurant business. You can never know when things will go south. There are a couple of reasons why your restaurant business might fail and we’re going to highlight some of them.

Bad Location

Location is everything in the restaurant business. You might have amazing food and exceptional customer service but you will still find it hard to attract customers because of the location. When there is no foot traffic, poor visibility, and no parking, it will almost be impossible to return a profit. A good location could help cover for serious shortcomings as customers can easily access your premises.

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“Hands Off” Approach

You can never expect to run a successful restaurant when you take a hands-off approach. You need to be in the middle of everything in order to understand the challenges. If you truly care about the business, you should be the first person to open the restaurant and the last person to leave. If the property is not one of your investments then you don’t have an excuse not to be involved in the day-to-day running of the business.

Poor Management

This is a challenge that not only affects restaurants but the whole business ecosystem in general. It will be tempting to hire someone to be a general manager since their resume looks impressive on paper. Running a restaurant or bar requires a lot of work. One must be willing to put in the hours in order to be successful. The pressure of the industry can be overwhelming even for experienced professionals. That is why you should take it upon yourself as the owner to steer the ship.

Bad Customer Service

Word of mouth spreads fast and that is why you can’t afford to have even one rude waiter or waitress. Everyone needs to be properly trained on how to deal with customers and conflict resolution. Not every customer is going to pleasant. You will be fighting a losing battle trying to argue with a customer. Even the best restaurants can close shop because of bad customer service, especially in this age of social media where brands are being exposed on a regular basis and you don’t want to be on the receiving end because of bad customer service.

Tax Complications

There are businesses that will do everything right except for being accountable for the books. You might be avoiding paying taxes hoping that the IRS will never catch up with you. Tax evasion will come with heavy penalties and you might have to declare bankruptcy as a result. That is why it is recommended that you have your books in order. You can use a tax consultant that is paid on a need-basis. The focus should be on running the business and not have to worry when the IRS will visit.

No Marketing

We live in an era where it is easy for a business to create buzz as long as it using the right channels. Digital marketing has made it possible to reach out to potential customers inexpensively. You can run Facebook ads to promote your business. The rates are cheap as a dollar a day and there is precision targeting so that your brand message is being seen by the potential audience.

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Lack of Capital

Depending on the type of restaurant, you might need a big investment before you can open the business. Since it is a new business, you will have to pay for some things out of your pocket. If you’re working with a budget, prioritizing will come in handy.

Not Knowing How to Price the Food

You will need to strike a balance with the menu items. You don’t want someone to be shocked when they see the menu. One way of going about determining the prices is by looking at what other restaurants are charging. You can check out cookout menu prices for inspiration. For low-cost dishes, you can always include supplements. The staff will also need to be taught how to upsell customers without being overly aggressive.

To sum it up, a restaurant owner needs to be aware that it is a business like any other. There should be structures and processes in place to promote efficiency. Managing growth is a challenge that will face a lot of restaurants. If it is not handled well, it could lead to the downfall of the business.